In a submission to the Securities Commission on proposed disclosure regulations, the PAA says while remuneration methods should be disclosed, the actual amount insurance advisers get paid was irrelevant to consumers.

In its submission the PAA says "the key point is that an adviser should be required to disclose if they have any restrictions or incentives towards placing business with a certain provider."

"...the PAA has concerns about the ability of 'aligned advisers' to offer diverse options across several product lines when they are accountable to just one insurer/future QFE [Qualifying Financial Entity]. This may prove to be a bigger concern than commissions and fee disclosure," the submission document says.

The adviser industry body also slammed the Securities Commission proposal limiting the use of the terms 'independent' or 'unaligned' to those who do not receive commission, saying this could "potentially mislead customers".

"Just because commission is earned does not mean an adviser is automatically biased towards one provider or product: declaring provider relationships is probably the key point," the PAA paper says. "... Arguably, stand-alone advisers are in a better position to offer diversified advice attuned to customer needs than those who are aligned or 'tied' to one provider, as may well occur with future QFE structures."

The PAA argues, too, that QFEs could hide the true cost of advice in their profit margins by simply disclosing adviser salaries whereas stand-alone advisers would have to declare commission received without deducting their business costs.

"Consumers could mistakenly interpret this as meaning that the QFE's advice is 'better value' and that their adviser is being paid less, when in fact this may not be the case," the PAA submission says.